SWEDEN
The Riksbank Executive Board will not be able to ignore the increased inflationary signals from hard and soft data since the January decision. As such, rates are very likely to be kept on hold at 2.25%, with the guidance indicating cautious approach to further (if any) policy easing. However, we still think some of the details in the February report will have blunted some of the hawkish impact of the higher-than-expected NSA print.
- February CPIF ex-energy prices rose 0.39% M/M on a seasonally adjusted basis (MNI calculations using the X-13 methodology). While a step down from January’s notable 0.72% M/M pace, it’s still a faster sequential pace of price rises than any month in 2024. On a 3m/3m SAAR basis, CPIF ex-energy rose 3.77% (vs 3.13% prior), the fastest rate since September 2023.
- Consistent with our analysis at the time, the upside surprise was largely driven by core goods and food. Seasonally adjusted goods (ex-food) prices rose 0.20% M/M SA (vs 0.98% prior) in February. This was well above the -0.03% M/M average in 2024 and the -0.05% M/M average through 2010-2019. However, we note that recent krona strength should help limit further accelerations in these categories in the coming months, given their higher import intensity.
- Meanwhile, services prices rose 0.28% M/M (vs 0.71% prior), in line with the 2024 average of 0.27% (but still above the 0.14% M/M average between 2010-2019).
- The Riksbank’s suite of underlying inflation metrics also rose in February, the majority at a faster annual rate than NSA CPIF ex-energy inflation. However, JP Morgan note that their “Supercore” index (which aims to measure underlying inflation for components most sensitive to the business cycle) “was once again soft, rising just one-tenth on the month, with the year-ago rate unchanged at 2.2% Y/Y”.
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